The Banking Act of Malawi: A Comprehensive Overview

Licensing Requirements

To operate as a bank in Malawi, an institution must meet specific requirements outlined by the Banking Act. These include:

• Corporate Entity: The applicant must be a body corporate.
• Minimum Capital: It must meet the minimum start-up capital requirements set forth by the Registrar’s directive on capital.
• Executive Officers: It must have at least two executive officers.
• Business Management: It must demonstrate its ability to effectively manage its business.

Prudential Supervision

The Act ensures that banks maintain adequate capital for their operations. The Registrar can increase ongoing capital requirements if necessary.

Banks are also restricted from declaring or paying cash dividends if it would lead to a breach of capital adequacy requirements.

Reporting Requirements

Banks must submit regular returns and information as required by the Registrar, including data on:

• Operations: Their business activities
• Subsidiaries: Companies owned or controlled by the bank
• Affiliates: Related companies or entities
• Associates: Companies with significant influence over the bank
• Holding Companies: Parent companies that own or control the bank
• Controlling Persons: Individuals who have significant influence over the bank

Supervision and Examination

The Registrar can conduct examinations to assess a bank’s financial soundness and compliance with relevant laws. Examinations can be conducted on a consolidated basis for affiliated companies, associates, holding companies, or individuals controlling a bank.

In conclusion, the Banking Act of Malawi provides a framework for licensing and supervising banking activities in the country. The Act emphasizes prudential supervision and reporting requirements to ensure the stability and security of the financial system.